Wednesday, January 4, 2017

Will Reaffirming A Debt Help Or Hurt Me?

It is a common thought that filing for bankruptcy will damage your credit. But if you are behind on your debts chances are your credit has already taken a hit. Filing bankruptcy at this point can only help you to get back on your feet. Bankruptcy will help to eliminate or reduce certain debts, but there are some rules about what you pay and what you can get out of paying.

In a Chapter 13 bankruptcy you will be allowed to pay your secured debts, and be considered current on those debts, while paying only a small part of your unsecured debts. In a Chapter 7 you can wipe out unsecured debt, while still paying for the things you want to keep that are secured by a loan – like your car our house. The most common way to keep making these payments is by signing a reaffirmation agreement. A reaffirmation agreement is like a new contract for the debt, and the money will still have to be paid even after your case is over. This fact might give you pause and wonder whether you should agree to reaffirm a debt. Here are some of the advantages, and disadvantages of reaffirming a debt:

         When you reaffirm a debt, your lender retains the ability to talk to you about the loan. So, if you get behind again or need some help down the road, the lender will have the legal ability to work with you.
         When you reaffirm a debt, it is still due after bankruptcy. So if you run into more money troubles after your case, you can still be sued for the debt.
         A reaffirmed debt will be reported as such on your credit, and the payments you make will show as being made. This can boost your credit score faster after a bankruptcy, but can also hurt if you do not pay on time.
In order to determine if you should sign a reaffirmation agreement, you have to look at your total financial picture. This includes knowing what debts you will no longer pay after your case is over, so you know how much money you have to put towards the debts you will be paying. We have experience helping people who are considering reaffirmation, and can help you too.

For help with bankruptcy deciding whether you should reaffirm a debt during your bankruptcy case, call us today or reach us online at We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

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